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HMRC confirms new team created to investigate the use of family investment companies

It was reported that HMRC has confirmed it has tasked a new team to begin investigating the use of FICs.

In an article on the front page of the FT Weekend entitled ‘Secretive UK tax unit homes in on rich families’, it was reported that HMRC has confirmed it has tasked a new team to begin investigating the use of family investment companies (or FICs as they are commonly referred to).

The team was created in April 2019, to do a ‘quantitative and qualitative review into any tax risks associated with them with a focus on inheritance tax implications’. The article goes on to say that this ‘…follows HMRC’s creation in 2009 of a high-net-worth unit, which focuses on the 7,000 or so people with £20m or more in assets’.

David Stokes, a Principal Associate in our Leeds Wills, Trusts and Estates team, comments:

‘It is no surprise that HMRC have tasked a team with investigating the use of FICs as a tax planning tool.

It is also no surprise to see the media quickly portray FICs as secretive vehicles used by the very wealthy.

As with any form of planning, there will always be those that push the boundaries beyond what is reasonable and fair, but for the most part FICs are just one example of a wide range of planning opportunities we would typically recommend to help structure family wealth.

FICs are created for many different reasons and in certain circumstances can even lead to increased tax bills, rather than a reduction, where tax mitigation is not the main driving factor for a client.

Clients who have already set up a FIC would do well to review the structure, to ensure it continues to comply with HMRC’s anti-avoidance provisions. Those considering implementing a FIC now, whilst also keeping an eye on the upcoming budget, will of course also want to ensure their FIC complies’.

If you have any questions about a family investment company already in existence, or if you are thinking about creating one for yourself or a client and would like to talk it through, please contact David Stokes on 0113 213 4059.

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